Derive the solution for X (t). 4. (10 marks) () 2 Consider an arbitrage-free securities market model, in which the risk-free interest rate is constant. There are two nondividend-paying stocks whose price processes are Si(t)=S (0)20.11+0.2211 S, (t) = S(0) 0.125r+632() where Z(t) is a standard Brownian motion and t > 0. e a) Find the differential equations of (S, (t)),zo and (S2 (t)),zo (07 marks) b) Determine the continuously compounded risk-free interest rate. (03 marks) 2 2/4